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Swedish ruling on the revaluation of VAT

by Maria Ström and Ebba Perman Borg

Published: 26 March 2026

The general rule is that the VAT tax base is the consideration paid for the goods or services supplied. However, in certain situations where the consideration is lower than the fair market value, the tax base may be subject to revaluation and instead be determined on the basis of the fair market value. Where no comparable supply exists on the market, the fair market value is deemed to be no less than the taxable person’s costs of providing the goods or services.

The Swedish Tax Agency took the view that the supplies constituted a single composite service, that no comparable services were available on the market, and that the tax base should therefore be determined based on the parent company’s costs of providing the services. For this purpose, the Swedish Tax Agency included all costs incurred by the company during the tax year, including costs related to capital raising and shareholder-related expenses. The key issue before the court was which costs could be included in the tax base.

The Court decided to refer the matter to the Court of Justice of the European Union (ECJ) for a preliminary ruling. The ECJ held that a parent company’s supplies of services should not automatically be regarded as a single composite service. It further stated that the fair market value must, as a first step, be determined using the comparable market method, and that the Swedish Tax Agency’s approach for assessing whether the consideration was lower than the fair market value was not compatible with the VAT Directive (C-808/23).

Despite the ECJ's clear guidance that the services should be regarded as separate supplies rather than a single composite supply, the Swedish Tax Agency maintained its position that the fair market value should be based on all of the company’s costs during the tax year. The Supreme Administrative Court subsequently rejected the Swedish Tax Agency’s method and held that the services should not be treated as a single supply. Instead, each service had to be assessed separately, and the fair market value of each individual service had to be determined when establishing the tax base.

As the burden of proof rests with the Swedish Tax Agency to justify a revaluation of the tax base, and as the Swedish Tax Agency had not demonstrated that comparable services were unavailable on the market for the individual supplies, the court concluded that the tax base should not be revalued.

In light of the ECJ's preliminary ruling, the outcome of the case was expected. Nevertheless, it raises questions as to why the Swedish Tax Agency chose to maintain its position despite the clear guidance from the ECJ. Going forward, it is evident that the Swedish Tax Agency may not in all cases treat a parent company’s management services to its subsidiaries as a single, unique supply of services for VAT purposes.

If you have any questions regarding VAT in relation to management services, please feel free to contact Schjødt’s tax lawyers.